Chartered Accountants Australia and New Zealand (CA ANZ) has signed a Call to Action on Climate Change. It has joined 13 other accounting bodies – representing 2.5 million accountants and students globally – in a move that will help members respond to the climate emergency and manage associated business risks.

The Call to Action, signed by chief executives, says “the accountancy profession can play a significant role in achieving both climate change mitigation and adaptation”.

It calls on accountants to help organisations integrate climate change risks into their strategies, finance, operations and communications.

Accountants should:

• provide sound climate change advice and services
• implement existing and developing reporting frameworks
• support sustainable decision making within their organisations by allocating budgets and resources
• develop information and insights built on transparent accounting systems.

The Call to Action also commits the signatories to provide training and support to members and to back measures for more useful disclosure, all leading towards a net zero carbon economy.

Karen McWilliams FCA, CA ANZ’s business reform leader, says “climate change risks can have financial consequences and accountants can help organisations transition to a zero carbon economy. Accountants also have a responsibility to act in the public interest and that includes preparing companies and clients to mitigate climate change.”

Picture: Karen McWilliams FCA.

Reporting climate-related risks

Regulators have been crystal clear on the impacts and risks of climate change to the economy, says McWilliams.

Directors already have a fiduciary duty to consider climate change and regulators have been encouraging appropriate disclosure of climate-related risks and opportunities. Specific climate-related disclosures may be legislated in the future.

Auditors also need to consider climate-related risks as part of their risk assessment and their relevance to accounting estimates and assumptions.

The risks that will need to be disclosed will be both physical risk and transition risk, which involves adapting to legislative and technology changes as countries shift to zero carbon economies.

The Call to Action on Climate Change is not only about saving the planet. “It is about risk management,” says McWilliams. “There are also changes businesses can make which will already have a positive effect on their bottom line.

“The transition to a zero-carbon economy will rely on adapting economic policy and associated market mechanisms. Accounting practices are central to achieving both.”

“The transition to a zero-carbon economy will rely on adapting economic policy and associated market mechanisms. Accounting practices are central to achieving both.”

Investor demand for risk disclosure

Risk disclosure will be the main mechanism the market will use to drive efficient allocation of capital and support a smooth and just transition to a zero carbon economy.

Accountants can apply their skills to meet the demands from investors for robust, reliable and comparable information for decision making. Rigorous reporting processes also build trust through greater transparency, says McWilliams.

“Better disclosure facilitates more informed decision making. What gets measured, gets managed,” she points out.

McWilliams acknowledges that accountants can’t solve the climate emergency alone. “But we have the skills and expertise to help the organisations we work with and to make a significant difference.”

Jennifer Foo CA, sustainability manager at Woolworths Group, grasped the link between climate change and accountancy early. “I have always been interested in sustainability. I started my career as a financial auditor, but I was always thinking ‘what could I do to help’?” she says.

“As accountants, it’s our role to work with others in business, industry and science, and be able to identify and assess what the risks and opportunities are to the business and influence the next actions.”

When the spectre of carbon emissions started to become a reporting requirement for businesses, Foo realised she could specialise and fuse her knowledge of climate change with her accounting skills.

“It’s important to me as an accountant because climate change can and will alter the way organisations need to operate and we need to prepare for it.”

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